Are customer portals competing directly with third-party e-Invoicing providers? Let’s see what the data suggests.

As part of our 2015 Perceptions Study, we asked Finance and Accounting professionals, from large and small companies, their thoughts and preferences regarding a variety of invoicing, payment and collections practices. One area of focus was whether they had been asked by their customers to join a third-party e-Invoicing provider or asked to use a customer online portal to submit invoices.

Types of suppliers using third-party solutions or customer portals

Our analysis showed that 16% of respondents submit invoices via third-party e-Invoicing providers while 21% do so via a customer online portal. While this is not surprising, we took a closer look at the data and uncovered some interesting insight. When asked if their customers, during the previous 12 months, had invited them to submit invoices via a third-party e-Invoicing provider (typically the only way a supplier can use such a system) or via their own customer portal, 23% indicated their customers had steered them to third-party providers while 35% indicated being asked to use the customer portal.

There are a couple of things to keep in mind here. First, these numbers are not mutually exclusive. Just because a supplier was asked to submit invoices via a third-party provider does not mean they were NOT asked to submit via the customer portal as well – and vice versa. Second, it does not represent a trend, at least not until we are able to string together more data over time.

What does this mean?

While it’s tempting to draw a certain conclusion about this data – such as more invoices are being funneled through online customer portals compared to third-party providers, that conclusion may not necessarily be true. By cross-analyzing our data, we can gain insight on where the invoice volume is being steered. Let’s look at what the data tells us in relation to the requests based on annual invoice volume:

Requests based on supplier invoice submission volume:

Suppliers being asked to submit invoices via third-party provider:

Invoice volume: fewer than 100/year = 2.7%

Invoice volume: more than 5,000/year = 12.5%

Suppliers being asked to submit invoices via customer portal:

Invoice volume: fewer than 100/year 3.2%

Invoice volume: more than 5,000/year 17.1%

From the above data, an initial conclusion can be drawn that suggests customers are asking higher-volume suppliers to submit via third-party provider AND customer portal while – while pointing to their own portal more frequently.

But, before we consider this analysis complete, let’s evaluate responses based on supplier annual revenue rather than invoice volume:

Requests based on supplier annual revenue

Suppliers being asked to submit invoices via third-party provider:

Annual revenue: less than $100 million/year = 6.9%

Annual revenue: more than $5 billion/year = 5%

Suppliers being asked to submit invoices via customer portal:

Annual revenue: less than $100 million/year 15.2%

Annual revenue: more than $5 billion/year 7.4%

When looking at the data from the perspective of supplier revenue, there seems to be no discernable difference between requests for third-party providers and customer portals – with the exception of a greater percentage of smaller-revenue suppliers being steered toward the customer portal by more than two to one.

Conclusion

We can likely draw a conclusion, in general, that customer portals are competing directly with third-party e-Invoicing providers. We can also conclude that higher-volume suppliers are being targeted at significantly higher rates by both solutions compared to lower volume suppliers. Furthermore, we can see a greater correlation between lower revenue suppliers and requests to use customer online portals to submit invoices.

This bears continued watching, as there are multiple implications if customers are asking just as many, or more, suppliers to join their online portal compared to third-party providers. One significant issue, as indicated by a number of respondents to our study, is the fact that suppliers may be asked to join different portals by different customers. If a supplier has 10 customers, that supplier may have 10 different portals their billing department has to learn. The more customers they have, the more systems they may have to learn.

On the other hand, although there are multiple third-party e-Invoicing providers and a supplier may have a similar challenge depending on who their customer has a relationship with, the issue is potentially mitigated with e-Invoicing providers. Third-party providers will have multiple customers on their platform allowing a supplier to have a single connection with one system to learn while submitting invoices to several different customers via that single system.

As we gather more data, we should be able to determine whether customers ask suppliers to use their online portals with greater frequency or if third-party providers will make substantial inroads.

Ernie Martin is founder and Managing Director of Receivable Savvy. He brings over 25 years of experience in financial supply chain management, marketing and communications and draws upon his extensive experience to share knowledge and best practices with AR professionals. His resume also boasts time at several well-known brands and companies such as Tungsten Network, Delta Airlines, CIGNA Healthcare and Georgia Pacific as well as a number of years as an independent consultant.